Sunday, July 12, 2009

A Make or Break Economy

When I spoke to you a couple days ago, I mentioned how we would like to make FAZE Apparel recession-proof like In-N-Out Burger. That's fine and dandy but our current economic climate is treacherous, to say the least. In fact, it may have just consumed one of the most recognizable brands in the fashion industry - Baby Phat. For those that don't know, Baby Phat is a premiere female hip-hop brand that was created by Kimora Lee Simmons in 1998.

According to, Kellwood Co., the St. Louis based company that owns Baby Phat, could be facing bankruptcy because of a huge debt obligation that is coming due on July 14th. How big you may ask? Let's say something along the lines of $140 million dollars!!! Daaaayyyyyuuuummm!!! Shit, I complain about a $75-$80 cell phone bill due every month but I couldn't even imagine owing someone that much. Due to the slowing economy and decreased sales, Kellwood can't pay the bonds that will be maturing on the 14th. The company did try to defer the bond payment through an exchange offer, in which Kellwood Co. would swap bonds maturing on Wednesday for bonds with more appealing terms that will mature in 2014. They were unsuccessful with this attempt. I hope Kimora's Baby Phat pulls through this, but the odds are against them in this economy. As the title states, this is a make or break economy, but at this point, Baby Phat is on the verge of being broken.

Bottom line - control your debt, don't let it control you. Until next time, stay Fearless and Zealous people!!! I'll holla.

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